City could raise “mansion tax” to pay for affordable housing

Not to be confused with the “pied-à-terre tax,” the city is now mulling over the idea to raise the “mansion tax.” The proposal has an unlikely supporter- Related Companies’ chairman Stephen Ross.

The proposal would increase the tax on the most expensive apartment sales in the city to pay for affordable housing, according to the Wall Street Journal. If introduced, the plan will need approval from the state legislature.

Currently, the mansion tax levies a one percent tax on housing sales that exceed $1 million. The current tax generated $259 million during the 2013 fiscal year.

Some developers have said that the plan would discriminate against extremely wealthy buyers, but others in the real estate business have shown support, the newspaper reported. Among the supporters is Stephen Ross, who is at the helm of the city’s most active development firm. Ross reportedly said that the tax would be a good source of money, due to the strong state of the luxury housing market.

“A tax on very high-end condos would be a better way to create resources for affordable housing than further taxing rental development,” Two Trees Management’s Jed Walentas, who is developing the Domino Sugar factory, told the Journal.

A 0.5 percent increase on apartment sales of $5 million or more would generate $34 million in 2015, according to New York City’s Independent Budget Office, the newspaper reported. It’s unclear how big the increase would be.

Extell Development’s Gary Barnett, the developer behind One57, does not support the proposal. “Anything that’s discriminatory against a class of owners, visitors, buyers in New York City sends the wrong message and will be counterproductive,” he told the newspaper. [WSJ]— Claire Moses

1% tax on property over one to three million.
3% tax on property from three to five million
5% tax on all above $5 million.

David Brown

Firstly $1M doesn’t buy much “mansion” in NYC, it is essentially middle class housing. Secondly this is not indexed to inflation so the $500K one bedroom becomes a million dollar masion if you wait a few years.